Meriwether v. Bird

By the Court. Lumpkin, J. delivering the opinion. The plaintiffs in error were sued by the administrators of William Biscoe, deceased, upon a note given by them, to the intestate in his life time. They pleaded a set-off for professional services rendered the deceased, and the only question in the cause is, at what time the account should be deducted. The Circuit Judge held, at the time of the trial, and this opinion is excepted to, and is now assigned as error. [l.j The object of a set-off, is to liquidate the whole, or a part of the plaintiff’s demand. As a remedy, it was unknown to the Common Law, according to which, mutual debts were inextinguishable, except by actual payment or release. Bab. on Set-off. [2. — 3.] By the Statute of Geo. II. c. 22, which has been generally' adopted in this, and all the other States of the Union, with some modifications, the defendant is allowed, in cases of mutual debt, to set-off his claim against the plaintiff’s, hj pleading it in bar. 5 Taunt. 148. 2 Camp. 594. 8 Watts’ R. 39. 9 Watts’ R. 170. [4.] If the plea of set-off then, is good in bar, it is obvious, that the party is entitled to have his demand applied as a credit, at the time the action is brought; otherwise, where the suit is pending for any length of time, as it was in the present instance, an open account, which was a complete bar at the commencement of the action, would fail finally to liquidate the plaintiff’s note, with the accruing interest. [596] Indeed, the whole doctrine of set-off, has reference to the situation of the parties at the time of the commencement of the suit. If the plaintiff has a valid cause of action at that time, it is not in the power of the defendant to defeat it and charge him with costs, by any act of his own afterwards, and to which the plaintiff was no party; as for example, by purchasing up claims against the plaintiff, for a larger amount. [5.] The doctrine of set-off was taken from the Civil Law, and was introduced to advance justice, as well as convenience, (pr. Kent, J. 3 Johns. Cases, 155.) [6.] Now, the rule of that code has been correctly cited by the learned counsel, from Pothier, namely: if you have a debt due from me, which carries interest, and afterwards become my debtor of a sum which, from its nature, does not carry interest, my debt will be held to be discharged to the extent of the mutual credit, from the time of such credit taking place, and interest would only be due for the balance, from that time — and the author puts the following illustration: If you are my creditor of a sum of ¿61000, for the price of an estate which you have sold and conveyed to me, and afterwards you become sole heir to Peton, and in that quality my debtor for ¿6800, the amount of a loan from me to Peton; from the death of Peton, your demand of ¿61000 is to be regarded as acquitted, to the amount of ¿6800, and subsisting only for the remaining ¿6200, and from the death of Peton, the interest will only continue to run upon the remaining ¿6200. Is there anything in our law of set-off which excludes this construction ? I know of nothing, and it is so manifestly right, that it commends itself to the conscience of every man. Interest is only given by way of damages for the detention of a debt. But if A owes B $500, and B owes A $300, can it be adjudged that A withholds anything but the balance of the $200 ? [7.] But it is contended, that our Statute forbids the allowance of interest on open accounts. It is one thing, however, to compute interest on a debt which is sought to be recovered in a separate and independent proceeding, and quite another, so to apply a mutual demand, as to prevent the accumulation of inter [597] est upon the contra claim. Our law of executors, postpones the payment of open accounts, to promissory notes; and yet, if a debtor of the deceased, by note, is sued by the representatives, he may plead his open account and thus extinguish the demand, notwithstanding debts of higher dignity are thereby defeated. I am not one of those who are forever complaining of our own legislation, and who think that nothing good can be done on this side of the great water. On the contrary, I believe, before God, that we live under the wisest code, civil and criminal, that was ever devised by the wisdom of man. Still, I am not insensible to its imperfections, and among its defects, I would unhesitatingly class all those provisions which debase open accounts ; I am bound, nevertheless, to enforce the Statute disallowing interest on unliquidated demands. I am under no obligation, however, to extend it to a case not embraced within its terms. I consider the Commonwealth against Clarkson, administrator of Passmore, (1 Raiole’s R. 291,) as directly covering this question. The Supreme Court of Pennsylvania, there held, that mutual demands extinguish each other, by operation of law, without waiting for any act of the parties. But there is another principle which would seem to entitle the defendants to the relief which they seek, and that is, in cases of mutual credit, where there is knowledge on both sides, of an existing debt due to one party and a credit by the other party, founded on, and trusting to such debt, as a means of payment, that the law will so apply it. All the authorities upon this subject, will be found collected in a note to Story’s Eq. Jur. 2 vol. §§14, 36. If it should be said, that this redress can only be had in Chancery, I reply, that our Common Law Courts have all the powers of Equity in this respect, and will administer justice by the same rules. In our view of this matter, then, we are constrained to reverse the judgment below, and direct a new trial.